| Robinhood has killed it; there’s no other way to say it. We probably wouldn’t be writing half of this newsletter if they hadn’t gotten us hooked on the adrenaline-pumping thrill ride of stock investing for millennials. Before you YOLO it all on OTM Robinhood calls, let’s talk about what allowed Robinhood to become one of the biggest brokerages on the planet – and why they might not exactly be stealing from the rich to give to the poor. |
| Robinhood has a great UI, but it was their 0% commission fees that allowed them to blow up. There are still costs to running a brokerage, so how did Robinhood figure out how to do it for free while paying to build an incredible product? Enter Payment For Order Flow. Robinhood doesn’t charge customers to trade. They sell the trade orders to hedge funds who pay to process the transactions themselves and execute their trades in advance, taking the other side of the transactions or using the information to make their own trades at a better price. Payment for order flow isn’t unique to Robinhood. Still, they’ve been able to charge the highest premiums because of their modern partnership approach with firms like Citadel — who was on the other side of the whole GME controversy. With great partnerships comes great responsibility, people! Use them for good! |
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